was introduced and five years after the act was passed (see Figure 5). However, the economic instrument is a supplementary instrument to the system of branch guidelines, and because of the lengthy negotiation procedures on the branch guidelines, the first of these were also introduced in 1980-81. It makes little sense to separate the effects of the effluent charges and of the guidelines, since these have in practice been combined.

German water policy has become a hybrid of command-and-control regulations and economic incentives. The main reason is that regulations had to go through the wringer of German federalism, and became subject to the general power struggle between Länder and Federation. Although national authorities preferred more extensive use of economic instruments, they had to accept the sector guidelines

approach

to

reach

agreement

with

the

Länder.

Furthermore,

the

institutionalised practices, such as the fiscal equalisation principle, was

importance of

countervailing

not understood,

and ultimately

they

undermined

the

Polluter-Pays

principle

in

the

implementation

phase.

D.

The Netherlands: The Legacy of Water Management

The Netherlands is a unitary state, with a sense of centralism that is said to originate from Napoleon's occupation. Unlike Danish and German municipalities, but like French municipalities, Dutch municipalities have little financial autonomy, and depend more on the state for their income. With regard to water pollution control, an exceptional infrastructure for water management, the Dutch Waterboards, has come to play a significant role. Since medieval times, the Dutch waterboards have been responsible for dykes and canals, and water pollution control developed incrementally in the 1950s under the auspices of local Waterboards. In 1969, the Netherland's first law on water pollution control, the Surface Waters' Pollution Act (SWPA), established a coherent system of economic instruments and gave the Waterboards an important function in pollution control (Environmental Resources Limited, 1982).

Water pollution issues are not managed by the Ministry of the Environment in the Netherlands. Since the implementation of Cornelius Lely's renowned plan to reclaim the Zuidersee, the Rijkswaterstaat under the Ministry of Transport and Public Works has been a state within the state in the Netherlands, and Rijkswaterstaat is responsible both for water quantity and water quality management. Rijkswaterstaat's scientific centre for water pollution control, RIZA (located in the city of Lelystad in what used to be the Zuidersee), has played a significant role in the national supervision of industrial pollution.

Following the conclusions from a study commission for water management, the Waterboards were given a prominent role in the control of water pollution. Rather than making the municipalities responsible, Waterboards were reorganised on hydrological principles (that is, on the basis of natural watersheds and river systems), and their traditions of user fees were transferred to pollution control. Formally, the Waterboards operate on the delegation of the Provinces (de Goede, 1982).

The Waterboards are dominated by farmers (and for this reason are sometimes called the "Boer- republics" of the Netherlands). A council headed by a dike-count is elected for each board. Both water quantity and water quality interests can elect or appoint members of the council. Their activities are financed by user fees. During the decision-making process on the SWPA, the Union of Waterboards requested that the government subsidise sewage plants, but this was refused. The Waterboards had al- ready demonstrated that sewage plants could be financed by means of user fees, and besides, the government argued in 1965, the use of fees and charges would give incentives to reduce pollution (Rijkswaterstaat, 1990). The Waterboards became responsible for the local waters, and the Rijkswater-